Will you give a cash loan to family members instead of leaving an inheritance?
A quarter of over-75s and more than a fifth of over-55s in total (21 per cent) have given a cash loan to family members instead of leaving an inheritance, according to Aviva’s latest Real Retirement Report. The findings also show nearly one in ten over-55s regularly give money to family to avoid Inheritance Tax (8 per cent), while a further 20 per cent would do the same.
T he spring edition of the report examines the financial pressures faced by the UK’s three ages of retirement – 55-64s (pre-retirees), 65-74s (the retiring) and over-75s (the long-term retired) – and focuses specifically on attitudes to inheritance. It shows just 7 per cent of over-55s rate this as their top financial priority in retirement, and while this predictably increases with age, just 18 per cent say the same by the age of 85.
traction among pre-retirees
Building up an inheritance pot in May 2013 comes a distant third as a financial priority for the over-55s, behind meeting living costs (77 per cent) and providing more immediate support to family (17 per cent). It is only after the age of 65 that it becomes their second priority after managing the cost of living (69 per cent vs. 19 per cent) and ahead of family support (12 per cent).
Instead of leaving an inheritance, the over- 55s are open to various alternatives to pass on any available wealth. There is a clear generation gap in their attitudes, separating the pre-retirees – who are most willing to consider other approaches – from the long-term retired who are more traditionally minded.
Economy clouds inheritance plans
Despite the attitude shift among those approaching retirement, more than half of over-55s still expect to leave more inheritance than their parents (53 per cent), with 37 per cent planning to leave significantly more.
This confidence is highest among the over-75s and falls away among the 55-64s and 65-74s, suggesting the economic situation has undermined people’s financial security on the lead-up to retirement.
Property assets play an increasingly important role
With savings squeezed, property is becoming a bigger feature of people’s inheritance plans. Nearly two thirds of over-55s plan to leave behind the family home (65 per cent), yet only a third received this from their parents (34 per cent). More than twice as many expect to leave other property or land (8 per cent) as received this from their parents (3 per cent).
Financial realities change
It is not just the older generation who have seen their financial realities change, but also younger family members who often need support to access the property ladder or raise children of their own. For some over-55s the desire to leave an inheritance is secondary to more urgent financial priorities, and even those who are financially secure are often tempted to share their wealth during retirement rather than wait to leave an inheritance.
Many over-55s who bought their homes much earlier in life have benefited from growing house prices in the decades since and understandably hope their family will share the proceeds as part of their inheritance. Anyone who needs to call on their property wealth at an earlier point – either to support themselves or family members – can aim to downsize or take out inheritance protection with equity release plans to safeguard a fixed amount for their loved ones’ future use.
The Real Retirement Report was designed and produced by Wriglesworth Research. As part of this, more than 16,686 UK consumers aged over 55 were interviewed between February 2010 and May 2013. This data was used to form the basis of the Aviva Real Retirement Report. Wherever possible, the same data parameters have been used for analysis but some additions or changes have been made as other tracking topics become apparent.